SF tech sector leads recovery

The Bottom Line

By Andrew S. Ross |
October 3, 2012

In this photo released by Virgin America Airlines, Virgin Group founder Richard Branson passes out beverages to guests aboard Flight 11 from New York to San Francisco, Wednesday, Sept. 19, 2012. Branson invited frequent flyers to be part of Virgin America's new ad campaign by sharing their own photo moments from 35,000 feet via Instragram and Twitter. The photos were then transmitted in-flight via the airlines WiFi to live digital boards at Times Square in New York. (AP Photo/Virgin America, Bob Riha, Jr.)

Photo By Liz Hafalia/The Chronicle

The first class seats on Virgin America are reclining massage chairs at San Francisco Airport at terminal 2 in San Francisco, Calif., on Thursday, August 2, 2012. Locally based Virgin America is celebrating their five-year anniversary.

Photo By Russell Yip/The Chronicle

Chen-chih, a butler at the St. Regis Hotel in San Francisco, Calf., demonstrates some of her duties including tea service on Thursday, May 3, 2012.

Above average.

That's about the best that can be said for San Francisco's economy, though it's saying a lot when stacked up against most of the others.

The city is outpacing the rest of California, which in turn leads the rest of the United States, in terms of job growth. Wages are increasing, albeit modestly. Its real estate market is the hottest in the country, and hotel occupancy, at 80 percent, is way ahead of other major U.S. cities.

These and other good news data bits are being presented Wednesday to several hundred business leaders at ForecastSF 2012, a conference co-sponsored by the San Francisco Chamber of Commerce and the San Francisco Center for Economic Development.

The report, put together by Wells Fargo chief economist John Silvia,is (relatively) bullish on the near future, citing the city's higher-than-average incomes as boosting consumer spending, demographic trends - i.e, the influx of young techies - firming up the structural base and an educated workforce that attracts top employers.

"San Francisco enjoys a dynamic economy with many amenities and strong fundamentals," said Silvia. But don't get complacent. Sky-high rents could yet drive people out of the city. Its high cost of living will likely put a crimp in further employment growth, and beware, Silvia warns, of a "burgeoning tech bubble."

"Local leaders must continue to foster an attractive environment for businesses," he says. Which I take to mean - memo to Mayor Ed Lee,who proclaimed October San Francisco's Innovation Month - don't put all your eggs in the one basket.

Healthy jobs: Not that we're dissing innovation. Advances in biotech and other changes in health care also contribute mightily to the city's economy.

In fact, close to 1 in 5 jobs in San Francisco are now generated by hospitals, biotech research and medical education, according to an analysis by Phil King, an economist at San Francisco State University, and the sectors account for $16.7 billion in expenditures.

Both the number of jobs and the wages paid in the local health care industry have surpassed most other sectors in recent years, according to the survey.

Waste be gone: More good news on the biotech front: A bill signed last week by Gov. Jerry Brownfinally does away with unnecessary state inspections of biotech facilities that duplicate the same job performed by the U.S. Food and Drug Administration.

Under AB1277, sponsored by Assemblyman Jerry Hill, D-San Mateo, the state's Department of Public Health must henceforth accept the FDA's inspection reports of biotech facilities, unless there's a risk to public health, or the FDA asks for the department's assistance.

"This duplicative regulation created additional hurdles to drug and device businesses' ability to manufacture and create jobs in California," said David Gollaher, CEO of the California Healthcare Institute. "The inspections cost individual companies hundreds of thousands of dollars for similar and overlapping inspections that provide no benefit to the public."

Strike one for regulations that undermine California's reputation as a good place to do business.

Best in class: While we're high-fiving, let it be known that the St. Regis, a "delicious urban oasis," was voted the best business hotel in San Francisco, beating out the Intercontinental (Obama's famous stopover) and the Four Seasons in Condé Nast Traveler magazine's 2012 business travel awards.

Not the same hymnbook: One final thing needs to be made perfectly clear: The San Francisco Chamber of Commerce is not to be confused with the U.S. Chamber of Commerce.

I point that out because the local chamber, which does not see eye to eye with the U.S. Chamber on a number of issues, gets blowback whenever the national group, as noted here Tuesday, brandishes its political proclivities in California.

So much so, that the local group periodically posts a disclaimer on its website, pointing out that it is not a subsidiary of the U.S. Chamber, nor of the California Chamber of Commerce, for that matter.

"The SF Chamber does not necessarily share the same views and is not bound to the policy positions of either organization," says the disclaimer, reposted Tuesday.